Interview: J. Soobagrah – Former President Ass. of IATA Travel Agents
‘What will the Government do if State Bank were to face the same situation as MK? The answer will have to come from the Government of Mauritius. They had better act now’
‘MK is a jewel of the Republic of Mauritius and has to remain so for the Mauritian nation’
For having worked for Air Mauritius for numerous years as Personnel Manager and witnessed our national airline grow, before he went on together with his wife Leckrani to set up Bonny Air Travel & Tours Ltd in 1987, and also for having been the President of the Association of IATA Travel Agents and the Association of Inbound Operators in Mauritius, Jeenarain Soobagrah is well placed to give us his views on the unenviable situation in which Air Mauritius has been catapulted. He is frank and unsparing in his analysis – but nonetheless, he does not feel that the plight of Air Mauritius is irreversible. He is more than hopeful that our flagship national airline company can proudly take to the skies again – provided that the right decisions are taken.
* After what has happened to South African Airways (which may be grounded for good) and Virgin Australia going into external administration on Tuesday (after being crushed by a $4.8bn debt mountain and failing to secure a federal government bailout) in the wake of the coronavirus pandemic, it was to be expected that sooner or later Air Mauritius would raise the alarm about its current financial predicament, but we now learn that its board of directors has decided to place the company under voluntary administration. Are you nevertheless shocked?
I am as much shocked with the Covid-19 as with the decision to place our national airline under voluntary administration! With the difference that with Air Mauritius, we are dealing with tangible assets and therefore manageable.
To come to the point, I must emphasize that Air Mauritius (MK) has had its glorious days as well as its gloomy ones. It was clear, with the departure of the last CEO in February 2020, that operational and financial troubles would be awaiting us at MK. Without going too much into the details for the time being, I will quote from the MK’s balance sheet for the nine months of the financial year 2019-2020 as at 31 December 2019: “interest bearing loans and borrowings” amounted to Rs 27 billion. That confirmed all the fears! But covid-19, portrayed as an invisible enemy, came as another nail in the coffin of MK. Government can print money but not MK.
* The announcement in relation to voluntary administration was made by the company’s board of directors by way of a communiqué. We have not heard anything as yet from the company’s main shareholder – the Government of Mauritius. What does that mean to you?
I will not be surprised to learn that the instructions came from the main shareholder itself. For such a major decision that will have repercussions at the national level and the choice of the Administrators leave no one in doubt that the Board of MK merely provided a rubber stamp for the Government’s decision.
* Air Mauritius had for long been the pride of the country and looked up to, together with State Bank and Mauritius Telecom, as the jewels in the country’s crown – that is so long as they held the flag high. One would therefore have expected the Government to step in and save the national airline even though its finances are facing stress with significant debts, isn’t it?
The example of South African Airways shows that its debt had reached a point of no-return whereby the SA government had to put an end to its generosity towards the airline. The main shareholder of MK, i.e. the Government of Mauritius had already been very generous by subsidizing the Africa-Asia corridor project, the China operations, the Rodrigues route, among others.
It is the responsibility of the main shareholder to step in and do whatever is required instead of digging the hole further for MK. The Government as the major shareholder of MK will have to bail it out, taking into consideration the national importance of our national airline. Unless there would be something sinister lurking with sharks around already at work and lobbying for the sale of MK’s headquarters…
* Social media has since the announcement gone hyperactive with comments like qualifying MK’s board decision as a “slaughter” of the national airline. Questions are being raised, like the one that follows: ‘If the Government cannot save Air Mauritius, what will it do when and if other big companies fail? Will it refuse to bail them out, especially the ones that deserve to be bailed out?’ What’s your take on that?
Let us take the example of the State Bank of Mauritius. What will the Government do if the latter faced the same situation as MK? But the real question is where to find 10 to 15 billion rupees to save MK? Forget about India or the Bank of Mauritius. The answer will have to come from the Government of Mauritius, and from nobody else. They had better act now. According to my information, the blue-eyed chaps recently nominated on the board of MK were already on the lookout for five billion rupees from the Government, pre-Covid-19. They should keep looking around…
* Another one from social media: ‘If MK cannot meet its obligations today, so are all the airlines of the world. Govt has guaranteed all the debts of MK, so where is the problem? Big Money will soon start talking… What a shame!’ Legitimate question, isn’t it?
This reminds me of the attempts made by the Big Money to create situations for take-overs of companies in the doldrums but with a high “hollywood” scenario recuperation afterwards. Examples are many in Mauritius.
* There is also the comment about the appointment of Sattar Hajee Abdoula, who had been earlier appointed chairman of SBM, as one of the administrators of Air Mauritius as allegedly constituting a conflict of interest. How to you react to that?
What more can I say than state that some are indeed born lucky. To earn 26 million rupees for some days of work is a feat beyond the reach of any reckless star. But that may be well deserved fees! This reminds me of Malvolio in William Shakespeare’s ‘Twelfth Night’ reading a letter from Maria, extract as follows: “Some people are born great, some achieve greatness and some have greatness thrust upon them”.
* Do you suspect that there is more to the decision to place MK under voluntary administration than meets the eye? The selling of the jewel in the crown through a disguised privatisation in the name of Covid-19 and the havoc it’s wreaking on national economies, including Mauritius’?
Any person devoid even of all common sense would not venture to surrender to such a temptation. MK is a jewel of the Republic of Mauritius and has to remain so for the Mauritian nation. Any usurper or party to such a traitorous act will earn him the infamy notoriety. MK placed in good hands, not in voluntary administration, can still have a bright future and will no doubt rebound once the Covid-19 is subdued and the right conditions prevailing at the right time.
* To be fair, the current predicament of Air Mauritius is not the doing of only the current or the previous governments; according to insiders, it’s also a long tale of political interference, mismanagement, schemers and turf battles within the Company since decades, isn’t it?
Amedee Maingard and Sir Seewoosagur Ramgoolam, the co-founders of MK must be turning in their graves. Having known them and followed the trail of MK to date, I am pained that our national airline has been unfortunate to have fallen in the hands of some dubious characters whose only objectives were power and money.
In short, the answer has been replied in your question itself. However we are allowed to dream of an MK devoid of all those miscreants who have in succession put MK in the present state. I must here make exception of one professional, the late Nash Mallam Hasham, the Chairman & Managing Director from 1997 to 2001, who was a thorough gentleman and steered MK without fear or favour. Megh Pillay was the CEO who also tried his best for MK but he was operating on a turf where even angels would fear to tread. For political reasons, they were got rid of.
* Given the constraints face by Air Mauritius in the pre- and post-Covid-19 situations, what could be the way forward?
MK has around 3,000 employees.
It will have over and above its present fleet of 15 aircraft, two more airbuses which, once purchased brand-new, had to be leased to South African Airways, through which MK was able to pay the monthly payments to Airbus. With the demise of SAA, it will now have to find between 40 to 45 million Euros monthly for the payment of the leases.
I understand that the monthly wage bill of MK is around Rs 360 million including the perks, according to its published accounts. MK commissioned reports during a span of 15 years from renowned consultancy firms such as McKinsey and Seabury from the USA and CAPA operating from Australia. Where are those reports? To my understanding, the Board granted considerable leeway to the Executive Directors whose interests, unfortunately, it is alleged would differ from those of the Board at certain times. As an example, one department in MK dealing with fleet planning has five Managers excluding the boss! Confusing themselves for airlines manning hundreds of aircraft, they have oversized structures and terms. On the same subject, it is common knowledge that MK is overstaffed by, sorry please fasten your seat belt, over 15%.
That is only on one item! There are many offices overseas which can be closed down which will have no negative effect on the revenue of the company. If we continue to probe on cost cutting in MK, the company can easily save one billion rupees yearly.
The abuse of free air tickets in Business Class by the Directors, Senior Staff and the Technical Crew. As an example, Emirates offers three times the number of seats in Business Class as compared to MK and has a rigid system of upgrading for strictly commercial reasons. One Technical Crew can make a firm booking months ahead for his spouse and children for them to travel in Business class. This is also the case for other categories mentioned above. Leave alone the number of passengers with economy class tickets who just hop onto Business class before take-off. An airline makes premium revenue from its Business class, but in the case of MK there is no economic consideration given to this issue.
A colossal amount is paid to Amadeus, the Global Distribution System which is used by MK for all its travel reservations. The figure of nearly Rs 1 billion rupees paid yearly can easily be halved provided the Board and Executives of MK use their grey matter appropriately.
We should remember the famous hedging contract for fuel purchase in 2008. The Government did bail out MK to the tune of Rs 8 billion.
Finally, it is clear that MK, alone, will not be able to remain afloat. The help of a strategic partner, a strong airline, will be inevitable. But this partnership needs to be on a strong footing and at the same time recognizing the true and genuine contributions of each party. No Big Brother syndrome and no overinflated superstructures!
* “Covid-19 has impacted travel and tourism like no other event before in history. With tourism suspended, the benefits that the sector brings are under threat… Millions of jobs could be lost, said World Travel Organization’s Secretary-General, Zurab Pololikashvili, recently. We also will not be spared. Is it too early to speculate on the shape of things to come in the tourism and travel sector in Mauritius?
There is always a silver lining in every dark cloud. I am full of optimism for the tourism and travel sector. We have been knocked down, no doubt about it. The world has survived two world wars and a great depression. We will bounce back. But the cyclone is here in another form and hitting all nations. We are resilient enough to overcome all hurdles. I remember Voltaire saying “Lord, protect me from my friends; I can take care of my enemies.” We might perhaps need that kind of protection from the enemies of the public interest at this stage.
* Published in print edition on 24 April 2020
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